Despite its great tradition of in-house developments from R/3 to HANA, SAP has never been shy about acquiring other companies to extend its application portfolio and gain access to new technologies. Examples from the past include Business Objects, Kiefer & Veittinger, and Sybase’s database technologies.

At this writing, Wikipedia lists 59 SAP acquisitions, with Concur Technologies being the latest. Among these acquisitions are several cloud-based Software as a Service (SaaS) solutions that were already successful on the market. With HANA Enterprise Cloud (HEC) and HANA Cloud Platform (HCP), SAP also added Platform as a Service (PaaS) and hosting services to its portfolio. In this hour, we provide a general overview of these solutions, how they fit into the big picture, how they are used, and the value they provide.

To business readers, it makes no difference whether SAP runs on premise (in a company’s in-house datacenter) or out on the cloud somewhere, so you may skip the first half of this hour and move directly to the section “Newly Acquired SAP Solutions,” which describes SAP’s new solutions.

What Kind of Cloud?

Discussions about the cloud tend to contain a confusing variety of acronyms. Obviously, every vendor defines its own cloud according to the product portfolio it has available.

The cloud definitions of the National Institute of Standards and Technology1 are so general that they are not much help in understanding cloud options. To understand the options relevant for SAP, it is helpful to take a look how other services are offered in the market.

An example that can in help understanding cloud concepts involves the provisioning of pizza for a family dinner. As most of us realize, there are several options available for obtaining pizza, ranging from genuine homemade to dining out and several options in between, as shown in Figure 8.1.

What distinguishes the different models (of cloud services as well as pizza) is the degree of the necessary infrastructure, supplies, and services you are able to control compared to the ones you have to “take-or-leave”:

In case of the traditional homemade pizza, you (or your grandma) can control the quality of all the ingredients, from flour to tomatoes, and you own all the kitchen equipment, down to the tableware.

If you use frozen pizza, you outsource the hassle of preparing the dough, sauce, and toppings, but have to rely on the taste and quality of the ingredients used by your preferred brand. In addition, not all combinations of toppings and cheese are available, you can’t choose the cheese from one vendor and the topping from another. The kitchen and dishes are still under your control (including the cleaning afterward).

If you choose pizza home delivery, you don’t have to own an oven, but some of the other restrictions for frozen pizza apply: you can’t choose the vendors for the ingredients. You depend on the capability of the service to deliver the pizza still hot, but you can still choose your preferred wine and tableware (and you still have to clean up afterward).

If you decide to go with your family to a pizzeria, you take care of the reservation, the selection from the menu, and payment; you do not need to do any food preparation or cleanup. On the downside, you have to accept what’s available on the menu and accept some longer waiting time until you get seated and served during prime time (which is called “oversubscription” in IT terms).

When it comes to SAP solutions and the IT services necessary to deliver them, it is important to distinguish between physical infrastructure (network, storage, or server) and software infrastructure (virtualization solutions, operating system, database, and application), where the actual ownership is represented by the license and maintenance contracts (see Figure 8.2).

As with the pizza example, the different cloud offerings relevant to SAP can be classified by the ownership of the various layers necessary to deliver SAP as a service.

In case of the traditional on-premise model, you own, manage, and maintain the complete infrastructure. Utilizing state-of-the-art private cloud virtualization and orchestration technologies provides the same flexibility as with the public counterparts. Being in a position to select from the portfolio of different hardware vendors competing against each other, you enjoy having access to the top expertise of their SAP competence centers for sizing and architecture optimization—worth hundreds of consulting hours free of charge—as a pre-sales service. Given the fact that a migration to another platform is not a big deal anymore, you can get prime attention if you run into trouble by claiming that you will move to another vendor and forcing the vendor to do the root cause analysis to prove that his part of the infrastructure is not causing the trouble. However, you also need the necessary skill in-house to operate and maintain the hardware and software you have acquired, and you have to pay license and maintenance fees for virtualization, the OS, the database, and the application.

While in a classical hosting model you are still in a position to choose the hardware infrastructure, you don’t have the hassle of dealing with the hardware vendors if you utilize an Infrastructure as a Service (IaaS) provider. The downside is that the hardware vendors are not available for root cause analysis when the system becomes unstable after an OS, database, or application patch if the service provider claims that the part he is responsible for runs stable. In regard to performance, you have to accept the level of resource over commitment you agreed to in the fine print. You pay only the hardware resources you consume but still have to “bring your own license” for the OS, database, and SAP solution, and you also have to bring the expertise to configure and maintain this part of the stack.

Using a Platform as a Service (PaaS) is nearly the same as using an IaaS provider, but you don’t have to worry about the operating system. And if you’re using HANA Enterprise Cloud (HEC) or HANA Cloud Platform (HCP), you don’t even need to be concerned about the database. You are still in control of the application licenses and can change the provider with little effort and little risk.

If you decide to go with a genuine Software as a Service (SaaS) offering or transform the licenses of your classical SAP solutions into an SAP cloud license, you get rid of the responsibility for the complete infrastructure stack and can focus on utilizing the features provided by the solution for your business. However, you can order only the business processes available on the service menu; customization is restricted in most cases to adapting the user interface to your corporate design. In a way, you can say that you can use a SaaS solution without having IT skills. However, as with all the other cloud offerings, you still need in-house expertise or external consulting to integrate the different applications with each other and train your users in how to use the services provided.

With all the hype surrounding the cloud, it may be worth mentioning some of the most common challenges. Security is among the major concerns that come to mind. With the implications of the Patriot Act, many non-U.S. companies keep their sensitive data within the border of their country. However, nifty details like patch management can become a major headache, especially in hybrid scenarios where one vendor’s patch cycles may not be coordinated with the customer, resulting in additional downtime. (For an in-depth discussion of security aspects, see our book SAP on the Cloud.2)